Preservation Institute Blog

Friday, June 27, 2014

Health Care: The Failure of Growth

International comparisons of health care spending and outcomes reveal a familiar pattern. Greater expenditures produce better outcomes at lower levels of spending, but the benefits disappear after spending reaches a level that is much lower than what we spend in the United States.

It is a commonplace to say that the United States spends about twice as much as the other industrial nations on health care but does not have better outcomes. An international comparison shows that greater expenditures stop producing benefits at a much lower level.

Here is a graph of health care spending and life expectancy.

We can see that spending more on health care does not increase life expectancy after spending exceeds about $1,500 per capita. The United States spends more than four times this much, the most of any nation in the world, but has lower life expectancy than almost all the nations that spend more than $1,500.

And here is a graph of health care spending and infant mortality.

Here, too, we see that spending more on health care does not reduce infant mortality after spending exceeds about $1,500 per capita. Though the United States spends more than four times this much, we have higher infant mortality than every nation except one that spends over $1,500.

These graphs do not show that all our health care spending over $1,500 per capita is useless. Much of this spending produces some benefit, but the benefits are so small that they are outweighed by other factors.

The United States has the highest obesity rate in the world, and this is one factor causing our poorer health.

Americans are also more sedentary than most people in the world, because our cities are built around the automobile. And high levels of inequality in the United States undoubtedly contribute to greater infant mortality and lower life expectancy among those with lower incomes, pulling down the average.

These graphs do show that we have reached a point where we spending more on health care produces very small benefits, which are outweighed by differences in lifestyle. If we want large improvements in our health, we will get them by exercising more and eating better diets - not by spending more on health care.